Balu Balakrishnan
POWER INTEGRATIONSAbout Balu Balakrishnan
Balu Balakrishnan, age 70, is President & CEO and Director of Power Integrations since January 2002 and became Chairman in May 2023; he joined the company in 1989 after 11 years at National Semiconductor. He holds an M.S.E.E. from UCLA and a B.S.E.E. from UVCE (Bangalore University), is the chief inventor of several Power Integrations technologies with 200+ U.S. patents, and has received the Discover Award and TechAmerica Innovator Award for EcoSmart technology . Pay-versus-performance disclosures show 2024 net revenues of $418.973 million and net income of $32.234 million, with a POWI TSR value of $130.27 for a $100 investment (peer index TSR $287.31); 2023 revenues were $444.538 million and net income $55.735 million, implying 2024 YoY revenue decline of ~5.8% and net income decline of ~42.2% based on reported figures .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Power Integrations | VP Engineering & Marketing | Sep 1994–Sep 1997 | Early product/market development |
| Power Integrations | VP Engineering & New Business Development | Sep 1997–Jan 2000 | Expanded new business lines |
| Power Integrations | VP Engineering & Strategic Marketing | Jan 2000–Apr 2001 | Set strategic marketing direction |
| Power Integrations | President & COO | Apr 2001–Jan 2002 | Operational leadership pre-CEO |
| Power Integrations | President, CEO & Director | Jan 2002–present | Guided growth; chief inventor with 200+ patents |
| Power Integrations | Chairman of the Board | May 2023–present | Board leadership; combined CEO/Chair |
| National Semiconductor | Engineering & Product-line Management | 11 years prior to 1989 | Product management experience |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| UCLA | Directors Certification Program (completed) | Not disclosed | Governance training |
| Awards | Discover Award; TechAmerica Innovator Award | Not disclosed | Recognition for EcoSmart environmental benefits |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | $690,961 | $706,250 | $738,192 |
| Bonus ($) | $1,000 (discretionary/patent) | $1,500 (patent) | $1,500 (patent) |
| All Other Compensation ($) | $13,074 | $14,073 | $14,454 |
| Total Compensation ($) | $7,015,329 | $8,218,982 | $8,610,159 |
- Base salaries were reviewed against peers and increased ~4% for the CEO in 2024 .
Performance Compensation
| Plan/Metric | Weighting (%) | Target | Actual | Payout (% of target) | Vest Timing |
|---|---|---|---|---|---|
| 2024 PSUs – Strategic goals (six goals; product dev, design wins, wafer/manufacturing capacity, cost reductions) | 40% total; each goal 2–20% | Not disclosed | ~190% of target achieved | Contributes to overall ~80% PSU vesting | Vested upon filing 2024 Form 10-K (Feb 2025) |
| 2024 PSUs – Revenue (relative measure vs analog semi industry) | Not disclosed | Not disclosed | ~12% of target achieved | Contributes to overall ~80% PSU vesting | Vested Feb 2025 |
| 2024 PSUs – Non-GAAP Operating Income | Not disclosed | Not disclosed | Not disclosed | Included in PSU framework | Vested Feb 2025 |
| 2024 PRSUs – Relative revenue CAGR vs industry | Not disclosed | 0–200% of target | Not yet determined | 0–200% at measurement end | Three-year period ending 12/31/2026; vest early 2027 |
| 2024 PRSUs – Absolute revenue targets | Not disclosed | 0–200% of target | Not yet determined | Higher of Relative vs Absolute measures | Vest early 2027 |
| 2024 RSUs – Time-based | N/A | 25% annually | N/A | N/A | First vest 2/1/2025; 4-year schedule |
2024 grants detail (CEO):
- PSUs (grant 4/1/2024): threshold 0; target 14,300; max 28,600; grant-date fair value $1,002,214 . Approximately 80% of target vested in Feb 2025 per performance outcomes .
- PRSUs (grant 4/1/2024): threshold 0; target 50,300; max 100,600; grant-date fair value $3,446,496 .
- RSUs (grant 4/1/2024): 50,300 shares; grant-date fair value $3,407,303; vest 25% per year, first vest 2/1/2025 .
Clawback: Bonus/stock awards to executives subject to repayment upon accounting restatement per company policy .
Equity Ownership & Alignment
| Item | Value |
|---|---|
| Total beneficial ownership (shares) | 473,699 (includes trust and near-term RSU vest) |
| Ownership % of shares outstanding | ~0.83% (473,699 ÷ 56,847,068) |
| Direct/Trust holdings | 454,949 shares in Balu & Mohini Balakrishnan Family Trust |
| RSUs vesting within 60 days of 3/17/2025 | 18,750 shares |
| Unvested RSUs (as of 3/17/2025) | 145,175 shares |
| Unvested PSUs + PRSUs (as of 3/17/2025) | 166,700 shares |
| Stock options (held at 12/31/2024) | None |
| Stock ownership guideline | CEO expected ≥3x base salary after 3 years |
| Compliance status | As of 3/17/2025, held ~454,949 shares valued ≈ $26.3 million, materially exceeding 3x salary guideline |
| Hedging/Pledging | Hedging and speculative transactions prohibited; no pledging disclosure noted |
Insider selling pressure indicators (2024 activity):
| Metric | Shares | Value ($) |
|---|---|---|
| Stock awards vested (RSUs/PSUs/PRSUs) | 62,884 | $4,744,867 |
| Stock awards forfeited (PRSUs 2022; PSUs 2024) | 85,225 | $5,258,383 |
Employment Terms
Potential payments (assuming event on 12/31/2024; stock at $61.70):
| Scenario / Benefit | Retirement | Involuntary termination not within 18 months of CoC | Involuntary termination within 18 months of CoC | Continuation after CoC (acquirer assumes awards) | Continuation after CoC (acquirer does not assume) |
|---|---|---|---|---|---|
| Cash Severance – Base Salary | $0 | $740,000 | $1,480,000 | $0 | $0 |
| Severance – Equity Bonus | $701,838 | $1,764,620 | $3,529,240 | $1,764,620 | $1,764,620 |
| RSU vesting acceleration (market value) | $0 | $3,820,773 | $7,641,545 | $7,641,545 | $7,641,545 |
| PRSU vesting acceleration (market value) | $2,069,007 | $2,069,007 | $15,387,980 | $15,387,980 | $15,387,980 |
| Continued employee benefits (COBRA) | $0 | $29,195 | $58,390 | $0 | $0 |
| Total estimated benefits | $2,770,845 | $8,423,595 | $28,097,155 | $24,794,145 | $24,794,145 |
Additional terms:
- Section 280G “best net” cut may reduce change-in-control payments to avoid excise tax if advantageous .
- Officers other than the CEO receive enhanced severance if terminated within 18 months after a change of control or after the CEO ceases to serve as CEO—features heighten retention risk during transition .
- CEO transition (July 2025): Balakrishnan resigned as CEO upon Jennifer Lloyd’s start, became Executive Chairman through February 2026 at $375,000 salary; will serve as consultant thereafter through up to February 2, 2029 for litigation/R&D support. The transition agreement amended the CEO Benefits Agreement to terminate certain severance provisions and limit post-termination CoC acceleration; no additional compensation is expected during consulting period, though the company expects $14–$17 million of stock-comp expense in Q3’25 due to ASC 718 non-substantive services classification .
Board Governance
- Board service: Director since 2002; Chairman since May 2023; combined CEO/Chair structure with a Lead Independent Director (Balakrishnan S. Iyer) appointed in 2023 to balance governance, lead executive sessions, liaise, set agendas, and engage with major stockholders .
- Independence: All directors other than CEO are independent under Nasdaq rules; CEO is not independent .
- Committees: Audit Committee (Chair: Iyer; members: Ganti, Vig); recommended inclusion of 2024 audited financials in 10-K . Compensation Committee (independent: Arienzo, Brathwaite, Gioia; six meetings in 2024; oversees CEO pay, plans, consultants, succession) .
- Dual-role implication: Board affirms CEO as Chair best positioned for strategy; mitigated by empowered Lead Independent Director; a stockholder proposal to separate roles was recommended “AGAINST” by Board in 2025 proxy .
Director compensation and practices:
- Non-employee directors receive annual RSUs with vesting prior to the next annual meeting; proposal in 2025 to raise annual cap for director compensation under the 2016 Plan from $300,000 to $750,000 .
Compensation Committee Analysis
- Program design emphasizes pay-for-performance with significant equity mix (RSUs, PSUs, PRSUs); CAP (compensation actually paid) for PEO varies with stock price and performance expectations per ASC 718 .
- Independent consultant (Aon/Radford) supports peer analysis; committee reviews Nasdaq-required independence factors annually .
- Say-on-pay support exceeded 80% in 2024; committee viewed as endorsement and maintained approach .
- No option repricing or cash buyouts without stockholder approval under plan terms; repricing prohibited in certain plans .
- Hedging/speculative transactions prohibited for insiders; insider trading policy filed with 10-K .
Performance & Track Record
| Metric | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| POWI TSR ($100 investment) | $166.78 | $190.35 | $148.28 | $171.35 | $130.27 |
| Peer Index TSR (SOX) | $153.66 | $219.51 | $142.94 | $238.72 | $287.31 |
| Net Revenues ($000s) | $488,318 | $703,277 | $651,138 | $444,538 | $418,973 |
| Net Income ($000s) | $71,176 | $164,413 | $170,851 | $55,735 | $32,234 |
Employment Terms (Succession)
- CEO succession: Jennifer Lloyd appointed CEO and Director effective July 21, 2025; Balakrishnan became Executive Chairman through February 2026 and is expected to remain on the Board thereafter, then serve as consultant (litigation, R&D/innovation) through up to February 2029 .
Investment Implications
- Alignment: Very high equity exposure and ownership value (~$26.3M) exceeding the 3x salary guideline; no options outstanding; hedging prohibited—positive alignment with shareholders .
- Performance incentives: Near-term PSUs tied to revenue relative performance, non-GAAP operating income, and strategic goals; long-term PRSUs tied to multi-year revenue growth (relative and absolute) with 0–200% payout range—provides clear growth levers but introduces vesting variability and potential share delivery-driven supply around measurement dates .
- Selling/settlement pressure: 62,884 shares vested in 2024 with $4.74M realized; 85,225 shares forfeited due to missed PRSU/PSU conditions—investors should monitor Form 4s and vesting calendars (Feb cycles) for potential trading supply .
- Transition risk: CEO transition reduces single-trigger severance richness and limits certain post-termination CoC accelerations for Balakrishnan; however, consulting arrangement implies continued technical and litigation leadership—net effect reduces change-of-control cash risk but maintains equity vesting continuity and accounting expense in Q3’25 ($14–$17M expected) .
- Governance: Combined CEO/Chair structure is mitigated by a strong Lead Independent Director; more than 80% say-on-pay support and independent Compensation Committee/consultant signal stable governance, though investors should watch the annual proposal dynamics regarding chair/CEO separation .